Cigar ChiveCome on in and have a cigar

Tobacco product Sales Holding Strong

Article by Scarlett Simpson

Machine-made or mass-market cigars are the largest segment of the sales. The most cigar smokers prefer the cost-effective machine-made cigars by about 95%. Cigar sales numbers are strong with about 13 billion cigars sold last year?including almost 12 billion large cigars and just under a billion little cigars.

The number of cigars sold pales in comparison to cigarettes sales, which topped 315 billion for the same period. While cigar sales do not approach those of cigarettes, they can offer convenience stores better margins. Sales of little cigars have been dropping since 2008 when the number of little cigars hit a peak of nearly six billion. Demand for little cigars was strong in the first quarter of 2009, until the federal State Children`s Health Insurance Program (SCHIP) tax hit little cigars on April 1. At that time, the tax on little cigars jumped from four cents a pack to .01 on parity with cigarettes. Sales immediately plunged 60% and that trend has continued. But those figures do not tell the whole story.

As defined by the federal government, a little cigar weighs under three pounds per thousand, uses all tobacco (even the homogenized tobacco leaf wrapper) and, instead of the flue-cured tobacco used as filler in cigarettes, the cigar tobacco needs to be air-cured like the larger premium cigars. Many manufacturers of little cigars knew the SCHIP tax would hit them sooner or later, so they began to reblend their products by adding a bit more tobacco to come in above that three-pound limit, making them what the federal government calls large cigars. Most of these transitions were completed by 2009 when the tax hit. The numbers bear this out in that the number of large cigars jumped by three billion from 2009 to 2010.

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